European markets make gains

MARKET OUTLOOK

- US: US markets rose week-on-week, in thin trading, on optimism recent economic data reinforces the scenario of a soft landing for the US economy. The Fed is meeting on September 20 and investors bet it will refrain from raising rates again. Last week's gainers were stocks from the consumer services, consumer durables and semiconductors sectors. Markets are closed today for Labour Day. Technically, US indices remain well oriented and stand at levels where further upside can still be expected. The rising 20d moving averages on all major indices will act as potential reversal points.

- EUROPE: European markets trading higher week-on-week, helped by strong gains in the travel and leisure, industrial and construction sectors and despite lower energy stocks. The ECB left its benchmark rate unchanged but prepared investors for a hike in October. There will be numerous European companies reporting their 1H results this week. Technically, as last week, European indices seem able to reach their recent highs before a consolidation can be considered. Watch any break below the 20 day moving averages as an early indication of potential weakness.

COMPANY PREVIEW

Credit Agricole (EUR 31.53 ; -2.81% ; ACA ; CAGR.PA)

Credit Agricole delivers on Wednesday its 2Q results. The market is expecting EBIT of E1.33bln, up 10% YoY, while net profit may increase 18% to E1.131bln. The group's target price was raised on Friday to E38 from E36 by UBS.

LVMH (EUR 80.15 ; 2.82% ; MC ; LVMH.PA)

LVMH is expected to report 1H results on Wednesday. EBIT is seen up around 20% due to a good sales mix and a better forex impact. Strong results are expected on the wine and spirits division. On July 25, the group reported 1H revenue of E6.96bln. As regard its FY results, the company said: "LVMH continues to capitalise on its worldwide leadership position, the excellent geographical revenue balance, the quality of its products and the creative and managerial talent of its teams to maintain progress in a growing worldwide market. Over the second half, LVMH will focus on developing market share for its star brands and on the launch of several new products. The first half performance allows LVMH to confirm its objective of achieving a very significant growth in its results for 2006."

Suez (EUR 33.87 ; 3.26% ; SZE ; LYOE.PA)

Suez delivers on Thursday its 1H results. In the same period last year, net income reached E1.5bln, up 12.8%, while EBITBA increased 6.4% to E3.4bln. On August 1, the group released 1H strong revenue growth of 9.5% to E22.4bln. This excellent performance confirms the dynamic growth.

Generali (EUR 29.49 ; -1.11% ; G ; GASI.MI)

Generali reports its 1H results on Thursday. The market sees a good set of results, with net income of E1.35bln, up 19% compared to same period last year. Last month, the group entered Bulgaria with the acquisition of a 51% shareholding in Orel-G Holding, a leading player in the Bulgarian insurance market, holding top positions in life and health insurance. Its expansion in international markets therefore continues, and the company is now present in ten different countries.

Enel (EUR 6.991 ; 0.39% ; ENEL ; ENEI.MI)

Enel is expected to deliver its 2Q earnings on Friday. On August 3, Enel entered the hydroelectric market in Panama, with the acquisition of a joint controlling stake in Fortuna for a consideration of $150m. Fortuna has 300 MW of hydro capacity and generates approximately 30% of the country's electricity. The group continues its expansion in renewable energies in Central and South America. Furthermore CEO Fulvio Conti of Enel said on August 25 that the Italian group would be interested in buying the assets that Suez may have to sell in order to gain the EU approval for its merger with GDF.